Interest rate rise in midst of cost of living crisis will leave many incredulous

AI desk brief

The Bank of England raised rates by 0.25 percentage points to 4%, citing risks that the Iran-war energy shock feeds into wages and persistent inflation. The article contrasts the Bank’s forecasts of 1.6% growth and 4.9% inflation next year with the OBR’s 1% growth forecast for 2027 and 3.75% CPI peak. OBR chief economist David Miles argues weaker business margins constrain wage settlements; the Bank’s surveys show little change in wage and price expectations since September. For gold, tighter policy could weigh if expected real yields rise, but the competing inflation and growth outlooks leave the near-term direction uncertain.